TL;DR

  • The US seizure of foreign-flagged vessels linked to Venezuelan oil is disrupting global shipping, driving up insurance and freight costs, and testing the limits of maritime law and sanctions enforcement.

Introduction

Following President Nicolás Maduro's arrest for narcoterrorism on 3 January 2026, the US continued to seize ships. This is a rare situation in which the US seized foreign‑flagged vessels for breaching US sanctions. Russia criticised the operation, viewing it as a violation of international maritime law.

What's Going On?

The US has announced that any vessel found to have transported sanctioned Venezuelan oil may be intercepted and detained even if it is sailing under a foreign flag and outside US waters.

Ordinarily, ships fall under the jurisdiction of their flag state, the country in which the vessel is registered. This principle, known as flag state jurisdiction, means that enforcement action is typically taken by the vessel's home registry rather than by third states. The current seizures challenge that norm by extending US sanctions enforcement extraterritorially.

At the same time, Venezuelan ports are operating at ISPS (International Ship and Port Facility Security) Level 1. The ISPS Code is a global maritime security framework introduced after 9/11 to standardise port security. Level 1 represents baseline security, but in practice, this involves constant surveillance, cargo verification, identity checks, and traffic control.

These inspections have caused significant delays. Cargo remains stuck onboard tankers awaiting clearance, imports and exports have slowed, and Venezuela's state oil company has temporarily halted oil sales.

There are also concerns about the limits of the protection offered by open registry states, often referred to as' flags of convenience'. Countries such as Liberia, Panama, the Marshall Islands, and Malta register large volumes of international vessels. Traditionally, registration under these states provided regulatory distance from geopolitical disputes. That assumption is now being tested.

Economic Impact

President Donald Trump has stated that the US intends to oversee the long-term redevelopment of Venezuela's oil infrastructure, projecting an investment of over $100 billion in investment.

However, shipping experts note that many sanctioned Venezuelan tankers are over 20 years old and lack full insurance or modern safety certification. These ageing vessels pose higher risks of oil spills and maritime accidents, increasing liability exposure for operators and insurers.

Following a $2 billion agreement on 6 January 2026, US refiners have struggled to process the sudden influx of Venezuelan crude. Global trading houses such as Vitol and Trafigura were granted US licences to market Venezuelan oil. In January alone, exports to the US reportedly reached approximately 284,000 barrels per day, nearly triple previous volumes.

Over the next decade, Venezuela could generate up to $150 billion in oil and gas revenues under US-supervised operations.

Legal Implications on Global Shipping

Insurer requests

Due to this unprecedented situation, insurers:

  • Charge higher premiums for voyages crossing enforcement zones
  • Draft contracts with more exclusion clauses dealing with sanction‑related risks
  • Conduct specialised due diligence, analysing cargo origin and flag history
  • May request war‑risk and sanction‑compliance assurances from shipping companies

Contractual risks

Shipping companies face several contractual risks, including:

  • Delays from rerouting or burdensome port inspections
  • Potential disputes over the applicability of force majeure clauses where security checks disrupt schedules
  • Increased risk of penalties in charterparty contracts due to delays affecting performance, for which charterers may request an addition of a protective clause to limit liability and further charges.

Future Outlook

Venezuela's shipping outlook remains uncertain as sanctions, political instability, and ageing tankers continue to disrupt trade. Persistent scrutiny, rising insurance costs, and strained supply chains suggest global shipping will face ongoing volatility and operational risk.